Mixed fortunes for Caribbean Cement

Caribbean Cement Company Limited made annual profit of $1.3 billion last year, but it represented a shrinkage of the cement producer's bottom line, despite a spike in volume sales of cement in its major market.

Profit was down 16 per cent relative to 2015.

The company said the improved sales exports shrank, but domestic cement volumes rose 16 per cent was due to upticks in both private and public infrastructure projects.

Sales revenue, however, improved by only 2.2 per cent to $15.8 billion, but even that reflected a new record for the company's top line performance amid upgrades to modernise the plant. In January 2016, Caribbean Cement announced a roughly US$30 million plant upgrade that would extend into this year.

"During the year, the company embarked on a major kiln overhaul which lasted 45 days and impacted the income statement by $957 million. This, along with the capital expenditure of $1.7 billion made during the year, are expected to improve the operational efficiency and reliability of the plant," said Caribbean Cement Chairman Parris Lyew Ayee and director Jose Luis Seijo Gonzalez in a statement issued with the yearly financial report for the period ending December 2016.

Other factors impacting the year's performance included the overhaul of cement mill No. 4 at $65 million, along with increased administrative and plant costs.

The export volumes of cement and clinker were down by 21.2 per cent and 78.1 per cent, respectively. Local cement volumes increased by 16 per cent mainly arising from the "positive trend of the infrastructural projects, Government projects and retail trade".

Earnings before interest, tax, depreciation, amortisation, manpower restructuring costs, as well as stockholding and inventory restructuring costs, improved over last year by 4.9 per cent, resulting from improvements in domestic revenue.

During the year, the group generated cash of $2.2 billion from operations, a 22 per cent reduction from 2015, resulting from repayment of intercompany short-term balances.

Capital expenditure, capex, doubled last year from $811 million to $1.7 million, due to the ongoing expansion project. The cement maker closed FY2016 with net cash $717 million, down from $910 the year before. Its fixed assets climbed by more than a billion dollars to $6.6 billion.

New parent

In late January, Caribbean Cement inherited a new ultimate parent after Cemex of Mexico launched a takeover bid for majority control of Trinidad Cement Limited through Sierra Trading.

Cemex up to then held a plurality of TCL shares but a minority stake in the Kingston-based Caribbean Cement. It now owns 69.8 per cent of TCL, whereas TCL holds nearly 74 per cent of Caribbean Cement.

The Jamaican operation, however, has been managed by Cemex appointees since 2015, the current boss being Peter Donkersloot Ponce, who became general manager in November 2016.

The former boss, Alejandro Vares Leal, was promoted to another job at Cemex Mexico, but he remains on Caribbean Cement's board, to which he was appointed in October 2016.